General Electric Co. (GE, Financial) shares slid after the company reported its second-quarter earnings before the market opened on July 21.
The company posted earnings per share of 28 cents, beating estimates of 25 cents. Revenue came in at $29.56 billion, surpassing estimates of $29.02 billion. Despite the beats, EPS declined from 51 cents in the prior-year quarter while revenue declined 12% from $33.49 billion for the same period.
The stock fell nearly 5% to $25.42 following the announcement, leaving the price around 20% lower than where it started the year. It closed at $26.69 on Thursday.
GE attributed the decline in revenue to weakness in its energy connections business, which offset the strong performance in the renewable energy and power segments.
The following chart illustrates the trend in the company’s revenue over time.
The company reported cash flow from operations of $3.6 billion, a 67% decline from a year earlier. This was a result of the divestment of its appliances division, which it sold to Haier Electronics (HKSE:01169, Financial) for $5.6 billion in 2016, up from the prior quarter. Chairman and CEO Jeff Immelt said cash flow is expected to increase for the remainder of the year.
"We've reduced our Industrial structural costs year to date by $670 million, and we are on track to meet or exceed our $1 billion cost reduction target for the year," Immelt said. "The global scale of the company, along with our ability to innovate industry-leading products and services, will help us navigate the current environment and unlock productivity across our businesses and markets."
Net profit sagged 58% to $1.34 billion, or 15 cents per share, from $3.30 billion, or 36 cents per share, in the comparable quarter of 2016.
While the company reaffirmed its full-year guidance for cash flow, profit, revenue and operating margin, it did not update its 2018 outlook.
Guidance for 2018 will be provided at a later date by incoming CEO John Flannery, who will step into the role in August and the role of chairman in January. Immelt announced his resignation last month.
Disclosure: I do not own any stocks mentioned in the article.
